Jim Valentine: Mineral rights in real estate

Jim Valentine on Real Estate

Jim Valentine on Real Estate

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Real estate is comprised of many components, the whole of which makes it so much fun and special. From the boundaries of the land, the makeup of the improvements and the nature and quality of the title, there is a lot to affirm, confirm and understand. One of the least discussed and/or understood in residential real estate is the mineral right component.
That is quite funny when you think about it as the minerals and the rights thereto are… in the ground. A typical definition of real estate reads as follows: “Real estate refers to real, or physical, property, and can include land, buildings, air rights above the land, and underground rights below the land.” Underground rights include the rights to the minerals. In Nevada, this is especially important and sensitive as our early history and current economy benefited greatly from minerals. We are today known as The Silver State.
When buying a home in a subdivision you will usually find that mining for minerals is prohibited by deed restrictions. Most of the time the mineral rights were reserved by the developer, so you don’t actually have the rights to the minerals even if you were able to mine them. Sometimes they aren’t withheld, similar to water rights remaining with the land as occasionally happens, but there is little you can do about it.
For many years it was common for people to withhold half of the mineral rights when they sold their land. That scenario creates the situation where if you were to mine it you will have a partner that you have little or no knowledge or control over. These situations were mostly done to finalize a negotiation, or to assuage an ego about getting a little bit more in the transaction but weren’t really too effective in helping the seller realize a further gain of any substance.
When you buy acreage in an area that has active mining, be sure to search the title history to make sure of the status of your mineral rights. You will not get title insurance on mineral rights from your title company so you must be careful if your purchase decision is predicated on mineral rights and mining. Title companies do not insure mineral rights.
Mineral rights don’t just involve silver and gold. Lithium is a current hot commodity that has a presence in Nevada, and there is a lot of oil in certain parts of the state. At one time the highest producing oil well in the United States was located in Railroad Valley. In addition to hydrocarbons, geothermal is a productive asset in Nevada that can be used for heat/power generation or simply recreation, depending on the specific location and its attributes. Some subdivisions located near a hot springs area allow homeowners to drill a well only for geothermal heat purposes.
Don’t overlook the mineral right component when buying real estate. A good place to start will be your title commitment that the title company provides at the beginning of your escrow. It will tell you if there are geothermal or hydrocarbon leases in place, or if mineral rights have been withheld or sold over the years.
Understand, however, that the report may not be complete and there will be disclaimers to that effect in the report. Don’t rely on it in its entirety if the minerals are a major part of your acquisition consideration. With the right land and property, you might find parties that are willing to buy or lease your rights and limit their exploration and mining to a portion of the property leaving the rest to you. Explore your possibilities, and the possibilities of others to interfere with your quiet enjoyment, during your purchase process. Remember to protect your minerals from poachers. Someone can drill sideways to your location so be aware of what is going on around you.
When it comes to choosing professionals to assist you with your Real Estate needs… Experience is Priceless! Jim Valentine, RE/MAX Realty Affiliates, BS.3481, 775-781-3704. dpwtigers@hotmail.com 


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